Towne Tip: How to Calculate Asset Income Under HOTMA

Programs subject to HOTMA's Section 102 and 104 asset rules include Section 8 PBRA, 202/8, 811 PRA, HOME, and the National Housing Trust Fund, among others, all sharing an updated mandatory compliance date of January 1, 2027. The asset income calculation is one of the specific changes that are required to be in effect, in your household certification files, on January 1, 2027. A Participating Jurisdiction may require earlier compliance for HOME, and a property with blended funding may already be operating under these rules if one of its other funding sources adopted early.

The Threshold and How Imputation Applies

HUD sets a dollar threshold for net family assets, adjusted annually for inflation. For calendar year 2027, that threshold is $54,898, cited to 24 CFR §§ 5.609(a)(2) and (b)(1). A household with net family assets at or below that figure has no imputed income calculated at all, only actual income from assets counts.

Once net family assets exceed $54,898, HUD's own implementation notice states the rule that must be followed: imputed income must be calculated for a specific asset only when three conditions are all true.

1.       The value of net family assets exceeds the threshold, and

2.       The specific asset is included in net family assets, and

3.       Actual income cannot be calculated for that specific asset.

An asset with a determinable return, even a return of exactly zero, does not get imputed income.

Imputed income on a qualifying asset equals the asset's net cash value, after deducting reasonable costs of disposing of it, multiplied by HUD's published passbook rate. For 2027, that rate is 0.38 percent, cited to 24 CFR § 5.609(a).

Worked Example

The Alvarez household owns two assets. A savings account which holds $40,000 at 0.05 percent interest, generating $20 in actual annual income. The household also owns a vacant parcel of land valued at $20,000 that produces no income and has no determinable rate of return.

Total net family assets equal $60,000, which exceeds the 2027 threshold of $54,898.

The savings account has a determinable actual return, so no imputed income gets calculated on it. Its $20 in actual income is the figure used.

The land has no determinable actual return, so imputed income is calculated on it specifically. $20,000 multiplied by the 2027 passbook rate of 0.38 percent equals $76.

Total asset income for the household equals $20 in actual income from the savings account plus $76 in imputed income from the land, for a combined $96.

The Common Calculation Error

A frequent mistake applies the passbook rate to the household's entire net asset value instead of only the specific asset lacking a determinable return. Using the Alvarez household's numbers, that incorrect method multiplies the full $60,000 by 0.38 percent, producing $228, then adds that to the $20 actual income from the savings account, for an incorrect total of $248. The correct total is $96. The error more than doubles the household's calculated asset income.

This mistake happens because the pre-HOTMA method imputed income across a household's full asset value once a lower threshold was crossed. The current rule isolates imputation to individual assets that specifically lack a determinable return, leaving every other asset's actual income, including a determinable return of zero, untouched by the passbook rate.

Run This Against Your Own File

Before you begin, download and use the HOTMA Asset Income Worksheet.

Pull one household file where net family assets exceed $54,898. For each asset, determine whether actual income can be calculated, and record that figure. For any asset where actual income cannot be calculated, multiply its net cash value by the appropriate passbook rate. Add the actual asset income figures to the imputed income figures for a single total.

Do not apply the passbook rate to the household's combined net asset value at any point in this process.